Government might levy 60 percent income tax on unaccounted deposits in banks: Sources

The Cabinet on 24 November is believed to have discussed amending laws to levy close to 60 per cent income tax on unaccounted deposits in banks above a threshold post demonetisation of high-denomination currency notes.

The move comes amid banks reporting over Rs. 21,000 crore being deposited in zero-balance Jan Dhan accounts in two weeks after the 500 and 1,000 rupee notes were banned, which authorities apprehend may be the laundered black money.

There was no official briefing on what transpired in the meeting that was called at short notice as Parliament is in session. Traditionally, there could no disclosures outside on any policy decision taken during the sitting of Parliament.

Sources said the government was keen to tax all unaccounted money deposited in bank accounts after it allowed the banned currency to be deposited in bank accounts during a 50-day window from 10 November to 30 December.

There have been various statements on behalf of the government ever since the demonetisation scheme was announced on 8 November, which has led to fears of the taxman coming down heavily on suspicious deposits that could be made to launder black money.

Officials have even talked of a 30 per cent tax plus a 200 per cent penalty on top of a possible prosecution in cases where blackmoney holders took advantage of the 50-day window for depositing the banned currency.

Sources said the government plans to bring an amendment to the Income Tax Act during the current winter session of Parliament to levy a tax that will be higher than 45 per cent tax and penalty charged on blackmoney disclosed in the one- time Income Disclosure Scheme that ended on 30 September.

As for those blackmoney holders who did not utilise the window, they would be charged a higher rate which could be close to 60 per cent that the foreign blackmoney holder had paid last year.

Sources said the government is keen to root out benami deposits, particularly in Jan Dhan accounts.

There was also talk of the government imposing a limit on domestic gold holding, but it is not clear if the proposal was discussed at the Cabinet meeting chaired by Prime Minister Narendra Modi tonight.